Short summary
Imagine a workplace where teams occasionally meet outside work—sharing a meal, playing games, or simply spending time together. It may sound like a small perk, but could it actually be profitable for employers to support such activities?
This study shows that it can. In a large white-collar company located in Kyrgyzstan, half of the offices (selected at random) were given small budgets to organize regular social activities. The other half continued business as usual. We found that offices that took part performed better in team-based tasks and saw employee turnover fall by about 4–5 percentage points—from roughly 1 in 10 workers leaving to closer to 1 in 15. That is a substantial reduction for any organization. On the other hand, our study found no improvement in measures of individual productivity, possibly because this is subject to high monetary incentives, with little scope to improve. The regular social activities generated new friendships and a higher attachment to colleagues and the office. In turn, stronger social ties helped teams coordinate and support each other especially for work that is beneficial to the organization as a whole, but not necessarily to the individual workers themselves. They also reduced turnover, suggesting that feeling connected at work makes jobs more attractive.
Key Findings
- Offices with social activities saw employee turnover fall by about 4–5 percentage points (from roughly 9–13% down to about 5–9%).
- Workers reported stronger relationships with colleagues.
- No increase in individual productivity.
- Clear improvement in team performance.
- The program required only small financial support, making it a low-cost intervention with sizable returns.
Relevance Today
As companies like Google, Microsoft, and many public institutions rethink hybrid work policies, a key concern is how to maintain teamwork and engagement. This study suggests that social interactions do matter and that creating opportunities for genuine interaction could pay off. Firm policies that support team bonding, even at low cost, could play an important role in improving retention and performance in modern workplaces.
Author Quote
“Small efforts to strengthen social connections at work can have large effects on both team performance and employees’ attachment to their jobs.”
Reference: Based on RFBerlin Discussion Paper 033/26 “The Value of Bonding at Work: Evidence from a Field Experiment” by Michele Belot, Rustam Hakimov.
Research summary
Think about the best team you have ever been part of. Chances are, it was not just about skills or incentives—it was about people getting along, trusting each other, and enjoying working together. Yet most organizations still focus on pay, monitoring, and performance targets, while largely ignoring the social side of work.
This study shows that social connections are not just a “nice extra”—they can have real economic value. In a large company, offices that received small budgets to organize social activities saw meaningful improvements in team performance and a sharp reduction in employee turnover—by about 4–5 percentage points.
This finding connects to a broader literature showing that workplace relationships matter for cooperation and motivation. But clean evidence has been scarce. This study stands out by directly testing whether social connections can be improved with simple low-cost interventions and whether stronger social connections at work lead to better economic outcomes.
Context / Motivation
Many workplaces struggle with coordination problems. In team settings, it is often difficult to ensure that everyone contributes equally. Some workers may rely on others to carry the load, especially when individual effort is hard to observe. At the same time, firms face high turnover, which is costly and disruptive.
In recent years, these challenges have become even more pressing. The rise of remote and hybrid work has reduced informal interactions—fewer spontaneous conversations, fewer shared moments. Companies and public institutions are now actively debating how to rebuild team cohesion. Some have pushed for more days in the office; others are experimenting with team-building initiatives. But there is little clear evidence on what actually works.
This study addresses that gap by testing a simple idea: can encouraging social interaction among coworkers improve how teams function?
Key Findings
The study is based on a field experiment in a large microfinance company with over 100 offices. Some offices were randomly selected to receive small financial support to organize regular social activities over three months—such as picnics, games, or movie nights. Other offices did not receive this support and served as a comparison group.
Because the assignment was random, the two groups of offices were similar at the start. This made it possible to interpret differences that emerge later as being caused by the social activities.
The first result is that social connections improved. Employees in treated offices reported stronger relationships with colleagues and a greater sense of belonging. This confirms that simple low-cost activities can be sufficient to create social connections.
The second result is that offices that participated in the social activities performed better in team-based tasks. This suggests that stronger relationships help workers coordinate and support each other more effectively.
The data clearly show improved team outcomes. The likely mechanism is that when people feel closer to their colleagues, they are less willing to let others down. They contribute more to collective tasks and are more responsive to team needs. In other words, social ties reduce the tendency to “free ride” on others’ efforts. On the other hand, the study finds no improvement in individual measures of productivity, possibly because individual productivity is already subject to strong monetary incentives, with little scope for improvement.
A third key finding concerns employee retention. Turnover fell by about 4–5 percentage points in treated offices. To put this in perspective, if about 1 in 10 employees normally leave, this drops to closer to 1 in 15. This is a large effect for such a low-cost intervention. The likely explanation is that stronger workplace relationships make jobs more enjoyable. Social interaction acts as a non-monetary benefit—something that employees value even if it is not reflected in their pay.
These results are striking because these improvements come at relatively low cost. The financial support for social activities was relatively small, yet the benefits—in terms of performance and retention—were substantial.
Policy Implications
The findings have direct implications for how organizations think about performance and retention. Many firms rely heavily on financial incentives or monitoring systems to improve outcomes. Team-building activities exist but are usually infrequent and not a central part of the employers’ management practices.
This study suggests that simple policies—such as providing small budgets for team activities, encouraging shared experiences, or designing spaces and schedules that allow interaction—can have meaningful effects. These are especially relevant in hybrid work settings, where opportunities for informal contact are reduced.
Conclusion
The main takeaway is that small investments in social connections can strengthen teams and reduce turnover. An open question is how these effects translate to fully remote environments, where face-to-face interaction is limited. Understanding how to build strong social ties in such settings remains an important challenge for future research.
References
Belot, M., & Hakimov, R. (2026). The Value of Bonding at Work. RFBerlin Discussion Paper.
Disclaimer
The opinions and views expressed in this publication are those of the author(s) and do not necessarily reflect those of the ROCKWOOL Foundation Berlin (RFBerlin). While research disseminated through this series may address policy-relevant topics, RFBerlin, as an independent research institute, does not take institutional policy positions.
Publications in the RFBerlin Research Insights series may represent preliminary or ongoing work that has not been peer-reviewed. Readers are advised to consider the provisional nature of such research when citing or applying its findings.
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